Glossary / Operations
Operations
COO-level operational terms: supply chain, process design, and scaling systems.
B
Bottleneck Analysis
The systematic identification of the process step or resource that limits overall system throughput, enabling focused improvement investment on the constraint that most limits output.
BPO
Business Process Outsourcing—the practice of contracting specific business functions to a third-party service provider, most commonly in customer service, finance/accounting, HR, and IT support.
C
CSAT
Customer Satisfaction Score—a transactional survey metric measuring a customer's immediate satisfaction with a specific interaction, product, or service on a defined rating scale.
Customer Effort Score
A metric measuring how much effort a customer must exert to resolve an issue or complete a task with a company, based on research showing low-effort experiences drive loyalty more reliably than high-satisfaction experiences.
CRM System
Customer Relationship Management system—software that centralizes customer data, sales pipeline management, customer interactions, and service history to enable coordinated customer engagement across an organization.
CMMI
Capability Maturity Model Integration—a process improvement framework that provides a five-level maturity scale assessing how well an organization defines, manages, measures, and optimizes its processes.
E
Escalation Matrix
A predefined framework specifying when and how issues should be escalated to higher organizational levels based on severity, time elapsed, or impact—ensuring critical problems receive timely senior attention.
ERP System
Enterprise Resource Planning system—integrated business management software that connects core processes including finance, procurement, manufacturing, HR, and supply chain into a single data platform.
F
Fulfillment Rate
The percentage of customer orders that are shipped complete from available inventory on the requested date, measuring supply chain reliability and inventory planning effectiveness.
Freight Audit
The systematic review and verification of freight invoices against contracted rates, shipment records, and accessorial charges to identify billing errors and recover overcharges.
I
Inventory Turnover
The number of times a company sells and replaces its inventory over a period, calculated as COGS divided by average inventory—measuring how efficiently inventory investment generates sales.
ISO 9001
The international standard defining requirements for a Quality Management System, providing a framework that organizations use to ensure consistent quality and continuous improvement in products and services.
L
Lean Manufacturing
A production philosophy derived from the Toyota Production System that systematically eliminates waste to maximize customer value while consuming minimum resources.
Landed Cost
The total cost of acquiring and delivering a product to the destination, including purchase price, freight, insurance, customs duties, handling, and taxes—the true total acquisition cost of imported goods.
N
NPS
Net Promoter Score—a customer loyalty metric derived from the question 'How likely are you to recommend us to a friend or colleague?' that segments respondents into Promoters, Passives, and Detractors.
Nearshoring
The practice of relocating business functions or sourcing to a geographically proximate country—balancing cost savings with timezone alignment, cultural similarity, and supply chain resilience.
O
OEE
Overall Equipment Effectiveness—a composite manufacturing metric measuring asset productivity as the product of Availability, Performance, and Quality, with world-class performance at 85% or above.
Order Fill Rate
The percentage of units ordered by customers that are shipped from available inventory without backorder, measuring the completeness of inventory supply against actual customer demand.
Offshoring
The practice of relocating business functions or manufacturing to a geographically distant country—primarily to access lower labor costs, with trade-offs in time zone alignment, supply chain length, and geopolitical risk.
Order-to-Cash
The end-to-end business process from customer order receipt through cash collection, encompassing order management, fulfillment, invoicing, and accounts receivable management.
Operational Due Diligence
The pre-transaction investigation of a target company's operational capabilities, processes, systems, and infrastructure to identify risks, value creation opportunities, and integration requirements.
P
Process Mapping
The visual documentation of a business process showing each step, decision point, handoff, and responsible party—enabling analysis, improvement, and communication of how work actually flows.
Procure-to-Pay
The end-to-end business process from purchase requisition through vendor payment, encompassing sourcing, purchase order management, goods receipt, invoice processing, and payment execution.
R
Record-to-Report
The accounting process cycle from transaction recording through financial statement preparation and reporting—the finance function's operational backbone connecting daily transactions to period-end financial disclosure.
Root Cause Analysis
A structured problem-solving method that identifies the fundamental source of a defect, failure, or process deviation—enabling permanent corrective action rather than symptomatic treatment.
S
Standard Operating Procedure
A documented, step-by-step instruction set defining how a recurring task should be performed to achieve consistent quality, compliance, and efficiency outcomes.
Six Sigma
A data-driven process improvement methodology targeting near-elimination of defects (3.4 defects per million opportunities) through rigorous statistical analysis of process variation and root cause identification.
SKU Rationalization
The systematic process of reducing the number of active Stock Keeping Units by eliminating slow-moving, low-margin, or redundant products to simplify operations and improve financial returns.
Shrinkage
The loss of inventory from theft, damage, administrative error, or vendor fraud—the gap between recorded inventory and physical inventory that represents direct P&L expense.
SLA
Service Level Agreement—a contractual commitment between a service provider and customer specifying measurable performance standards, response times, and consequences for performance failure.
Shared Services Center
An internal organizational unit that consolidates common business support functions—finance, HR, IT, legal—into a single entity serving multiple business units, capturing scale efficiencies while maintaining internal control.
V
Value Stream Mapping
A Lean manufacturing technique that visualizes the complete flow of materials and information required to deliver a product to the customer, identifying value-adding steps and waste elimination opportunities.
Vendor Scorecard
A structured performance measurement framework that evaluates supplier performance across quality, delivery, cost, responsiveness, and compliance dimensions to drive accountability and inform sourcing decisions.
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